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The same factors that permitted Nike to grow at an impressive rate over the last
several decades taking advantage of global sourcing opportunities to produce
lower cost products and investing these savings into innovative designs and
marketing campaigns have also created serious problems for the company in
recent years. Already in the 1980s, Nike had been criticized for sourcing its
products in factories/countries where low wages, poor working conditions, and
human rights problems were rampant. However, over the course of the 1990s, a
series of public relations nightmares involving underpaid workers in Indonesia,
child labor in Cambodia and Pakistan, and poor working conditions
in China and Vietnam combined to tarnish Nikes image. As Phil Knight
lamented in a May 1998 speech to the National Press Club, the Nike product has
become synonymous with slave wages, forced overtime, and arbitrary abuse.
How Nike, a company associated with athleticism, health and fitness, and
innovative marketing and design, came to become the poster child for the anti
globalization movement provides an interesting window into the potential risks
and problems which globalization creates for all multinational corporations. In
what follows, we provide not a comprehensive review of the various abuses of
which Nike and its suppliers have been accused in recent years, but merely three
anecdotal illustrations of the kinds of problems the company has confronted.
of the basic needs of one individual let alone a family. Nikes Korean suppliers
were seen as especially stingy with wages and abusive to local workers. One
worker at Nagasakti Para Shoes, a Nike contractor, said that she and other
Indonesians were terrified of their South Korean managers: They yell at us
when we dont make the production quotas, and if we talk back they cut our
wages. The plight of workers in these factories became publicized through the
skillful use of media by several NGOs. Jeff Ballinger, founder of Press for Change,
(but at the time employed by the Asian-American Free Labor Association, a
branch of the AFL-CIO), spent nearly four years in Indonesia, exposing low wages
and poor working conditions in factories producing Nike goods. In 1993, CBS aired
a report about workers struggles at Nikes Indonesian suppliers, featuring
Ballinger. In 1994, harsh criticism of the companys practices appeared in an
array of different publications: The New Republic, Rolling Stone, The New York
Times, Foreign Affairs, and The Economist. At first, Nike managers sought to
ignore and/or deflect these criticisms, arguing that the Indonesian factories were
owned and operated by independent contractors, not by Nike. Nikes Vice
President for Asia at the time claimed that Nike did not know the first thing
about manufacturing. We are marketers and designers. The companys general
manager in Jakarta argued, They are our subcontractors. Its not within our
scope to investigate [allegations of labor violations]. But by the mid-1990s, Nike
instructed its Indonesian contractors to stop applying for exemptions to the legal
minimum wage. In April 1999, after the Indonesia government raised minimum
wages to 231,000 rupiah/month (US$26), Nike announced that it would raise
wages for workers employed by its suppliers above the legal minimum wage,
from between US$30-37.50 per month.